By Moipone Malefane
While the government is pursuing a number of initiatives to bolster the SMME sector, President Cyril Ramaphosa says now is not the time to take the foot off the pedal.
The National Planning Commission estimates that South Africa needs 5.8 million MSMEs to meet its job creation targets, meaning that the country must double the number of these businesses.
“The Government of National Unity has made inclusive growth and job creation our apex priority. Supporting small enterprises is an integral part of these efforts,” he told attendees at the Presidential Micro, Small and Medium Enterprises and Cooperatives Awards ceremony over the weekend.
While international experience shows that MSMEs are drivers of sustainable growth and countries with more of these enterprises tend to have lower inequality levels, South Africa has been painfully slow at supporting the growth of the sector, including entrepreneurs, who are drivers of innovation.
The president said that the rates of entrepreneurship in South Africa were low by continental standards.
According to the 2022 Africa Youth Survey, more than one in five working-age persons in Africa have started a new business, and more than three-quarters of young people on the continent plan to start one in the next five years.
By contrast, the most recent Global Entrepreneurship Monitor report on South Africa found that the percentage of adults intending to launch a new business in the next three years declined to 10% in 2023.
This is the lowest proportion in 20 years.
“This is a worrying trend at a time when economic growth remains constrained and when there is limited capacity in the economy to absorb the high number of unemployed people. It is therefore essential that we encourage entrepreneurship,” Ramaphosa said.
Just as importantly, the country had to enable the emergence and growth of MSMEs and cooperatives, he said.
The president told the gathering that a number of projects and policy introductions were underway to capacitate the sector.
One of these was the recent merger of finance agency Sefa, development agency Seda, and Cooperatives Bank Development Agency into the Small Enterprise Development Finance Agency.
Of the R730-million disbursed to date by the new agency, R101-million has gone to township enterprises and R261-million to rural enterprises.
It has also provided non-financial business support to more than 15,000 township and rural enterprises.
Ramaphosa said that legislation was in the pipeline to streamline business licensing, and an e-registration system that integrated the work of the SA Revenue Service and the Companies and Intellectual Property Commission was under development.
If the country was to fully unlock entrepreneurial potential, the president said there must be a razor-sharp focus on start-up growth, especially in the burgeoning tech sector.
“We must ensure that we are not left behind in the global transition to knowledge and innovation-based economies. As part of this, we must scale up the adoption of advances like mobile payments and digitised record-keeping by small businesses.”
He said he was encouraged by the work of the departments of Small Business Development and Science and Innovation on a national start-up policy.
Among other things, it would deal with issues such as intellectual property registration and foreign exchange controls.
“Even as this is all work in progress, we recognise the urgency with which we must scale up support for small businesses in South Africa. They are the driving force of our economy,” Ramaphosa said.
Scaling up support included targeted interventions to address financial exclusion and onerous regulatory requirements, and providing access to funding, capacity building and other support.
He thanked the millions of entrepreneurs who were making the country work and the economy grow.
